Flip the Funnel: How to Use Existing Customers to Gain New Ones

HOW WE’VE DONE IT IN THE PAST

The process of allocating budgets and making investments from them is not exactly rocket science, but perhaps it should be. This is one case where art is unwelcome at a table that really needs to be laser focused on three primary variables: inputs, outputs, and outcomes. Return on investment (ROI) remains the simplified metric that we covet in order to validate our decisions, assure us we’re heading in the right direction, and extrapolate to project and predict future spending.

For many companies that have no clue how to calculate meaningful return on investment, there’s a less-foolproof method of using last year’s budget as a baseline or benchmark for next year—and in the interim, making sure all unallocated money is spent in a use-it-or-lose-it power play. Increasingly, however, companies are turning to marketing mix modeling (MMM), which helps them figure out how to optimize their media spending and reallocate their marketing dollars from one bucket (say, advertising) to another (say, public relations or digital marketing). It’s a zero-sum approach that attempts to maximize both the efficiency and the effectiveness of paid media impressions in order to yield the best possible levels of reach, frequency, and impact.

Optimization makes all the sense in the world and will no doubt continue to do so. Tweaks, reallocations, and redistributions of available funds across the full spectrum of acquisition tools, platforms, media, and approaches are ...